10 ways to emerge with an advantage from the economic downturn

Here are 10 ways that manufacturers can leverage technology to emerge from this difficult economic time with an advantage over the competition.

Tom Emmrich, president, Americas, Dassault Systemes

07/22/2009

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Emerge stronger from tough economic times. Here's how.

Whenever a company experiences a downturn, whether it's the economy, a decrease in sales, or operational difficulties, the reaction from critics is usually that the company needs to sharpen its focus, optimize its structure and improve internal execution. The hope is that these actions can both "right the ship" and allow the company to emerge from the difficulties better positioned to take advantage of future opportunities.

But what does that really mean? The current economic downturn is approaching one year, so what should product and manufacturing companies be doing to prepare for the next upturn that is sure to come. How can companies "emerge with advantage?" Technology, such as product lifecycle management (PLM), can play an important role in facilitating new or improved processes in order to weather the current storm and maximize future potential.

Here are 10 ways that manufacturers can leverage technology to emerge from this difficult economic time with an advantage over the competition.

1. Cut costs: While this may seem obvious, the first thing a company should do when it enters a downturn is look for ways to lower costs without affecting the value provided to the consumer. In short, become more efficient. Cutting costs should always begin with tightening internal processes and getting rid of wasted or duplicated effort so you can have a clear benchmark for further evaluation. From that point you can then look into things such as using PLM to simulate the build, production and testing of products before dedicating hard assets to build expensive prototypes.

2. Reduce risk: There are several types of risk faced by companies, all of which are heightened during a downturn. Companies run the risk of losing key employee expertise as employees leave, retire, or fall victim to downsizing. Additionally, the fruits of that expertise - your company's intellectual property (IP) - is core to its future existence. Is your IP well-protected? If not, a downturn is a perfect time to review what you have and create an IP management and protection system that can be maintained when things turn around.

3. Use technology: One predictable reality of the business world is change, and companies need to adapt accordingly. Utilizing the latest technologies and best practices can drive greater efficiencies, free time for innovation and give an organization the flexibility and core set of tools needed to succeed when the economy rebounds. Companies with a strong product lifecycle management strategy will be able to respond more rapidly to market changes or increases in demand by being able to iterate digitally on various product alternatives, and then quickly move to market while the competition is still getting started.

4. Innovate: Make the time to innovate in your business. While this sounds easy (or vague), innovation means more than a casual or informal awareness of the market and industry - and must pervade the entire company, not just a few people. You need to develop a culture of innovation and process discipline to support it. Encourage (but not pressure) employees to come up with new ideas, and find uses of your product that can take the company in a new direction. This often starts with making more of your company's collective knowledge selectively visible to a broader population. Allow one idea (or past product) to inspire another, and allow more of your team to leverage elements of previous products to be effectively re-used in the creation of the next idea.

5. Improve collaboration: To be a successful, global company in today's markets means you must have the ability to seamlessly connect with your partners, suppliers, customers and branch offices. Companies need to have both the ability to openly exchange information, but also maintain strict version control, keep track of design iterations, and trace every single product development change from conception to completion. Technology such as product lifecycle management can help organizations set up real-time systems involving all important stakeholders, which should include involving customers in the design and innovation process. This will result in quicker product development and time-to-market.

6. Diversify: It is no secret that certain industries are consolidating while others are growing - this is a natural cycle of global commerce. If your company's fortunes are tied to a shrinking industry, then it may be time to diversify the markets you serve. Several industries and markets use similar technology systems, production lines, etc., which means that the shift from delivering products to one industry to delivering them to a different industry may not be as dramatic as it sounds. With PLM you can virtually conceptualize and develop adaptations (or variants) of your current products to be marketed to new use cases to drive new revenue.

7. Nurture customer relationships: Your organization isn't the only one looking to seize additional market share when the economy improves; your customers will be looking to do the same. Help them, and let them help you. See how you can collaborate and operate faster, better and cheaper. This will not only strengthen relationships with key customers, but provide a valuable insight that can be applied to other customer situations in the future. The consumer/producer interaction during the innovation cycle will accelerate dramatically in future years as a combination of available collaboration technology and the "natural" habits of a generation raised on an expectation of easy social collaboration.

8. Operate efficiently: This is the most important aspect of improving and preparing your company for success when the markets take a favorable turn. Efficiency involves reducing expenditures while maintaining or improving productivity and output. An economic downturn is, in fact, the perfect time to evaluate internal processes to identify ways of working which require evolution. For example, designing products in 3D can eliminate translation issues and costs when outsourcing manufacturing to a contractor that speaks a different language. And creating a company platform with one source of data, and utilizing common processes and tools, helps to ensure that waste and duplication is minimized and re-use of intellectual capital is maximized. To be efficient, you must work collaboratively and create a scalable process that can be expanded and repeated as things get better. If you do this, you will be able to accommodate new businesses, new products, new employees and new industries without linear increases in cost.

9. Take care of your talent: People are the most important asset of any organization, no matter what the market. A downturn is the perfect time to take stock of who and what you have and take steps to retain the most important employees on your team. Operating with integrated technology tools helps to reduce employee frustration due to communication and inefficiency, and helps the company by capturing the collective enterprise intelligence.

10. Prepare for new talent: In addition to protecting the talent you currently have, you need to make sure you're prepared to on-board future talent. Your new workforce is accustomed to visual experiences and interaction, such as 3D gaming, internet video, social networks and the like. They will expect the same level of capability and interaction in the business environment - both as employees and customers. To be successful we all must be ready to communicate in the language of the market.

These suggestions don't just apply to companies that are having trouble during these difficult economic times. Even for those companies that are doing comparatively well, a review of many of the tenets of a good business are important to realize future savings, and more importantly, to return to growth faster and to win market share. Operating in this way is about maximizing a company's true competitive advantage - its people and intellectual capacity - and complementing those strengths with the best available technology.

- Tom Emmrich is the president of Dassault Systemes' American presence and is responsible for the structure, management and evolution of Dassault Systemes' business operations within the Americas. Emmrich has extensive experience in the operational, sales and financial business domains, having worked for years in numerous positions at IBM.

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